again, that if he is allowed even a portion of his agenda to be enacted, the american people are seeing that this is a president that is willing to stay in your -- in the room. trying to get done what is in the best interest of the american people. he has done so by dealing with the right in his own party, as well. >> his toughest opponent? >> michele bachmann? >> really? why [laughter] ? -- really? why? [laughter] [laughter] >> i do not know who his toughest opponent will be. she has done surprisingly well, although maybe not that surprising given her populist appeal. i wish her good luck and good fortune. i think anyone will have a

difficult time defeating president obama. >> rep john larson, thank you for your time on "newsmakers." >> happy to be here. >> your pens really started to fly at the end when you started talking about the consumer price index and payroll tax increases. what does that say about the current discussion over the debt and fiscal matters? >> up until now we have not seen concrete proposals. everything has been negotiated behind closed doors. even he said that he did not know what the meat on the bones was. saying that he would support this, not support that, those are the things that are fascinating. they will need democratic votes to pass this thing. >> the discussion, starting with

taxes and continuing through social security and medicare, if there is an order to reduce benefits substantially, there has to be a change in structure. there is a lot of new ones here nuance here.uanc what will they accept? what will be difficult to explain back at his and diner, as he was talking about? -- back at his a diner, as he was talking about? -- back in his diner, as he was talking about. we did not get into discretionary cuts, but there are trillions on the table. someone is going to feel that pain. how does he explain that back

home? >> tax increases on the house side, and has to be a word. if i had known that, acknowledged that, they will defend its most adamantly. is interesting to hear john larson say that we will not cut benefits, but that he is open to raising retirement eligibility for those programs. >> working on tax cuts, balancing on their own, take us into next week in where you think this discussion heads. where will we be next week? >> this is friday morning and the house, passing whenever it is called, with boehner and eric

cantor at the podium today, caught -- calling out half the senate. as they have pointed out, before the show started, the markets will be watching closely as well. >> the media, pundits, members of congress, think that the government is not going to default. we do not know how we are going to get their. who we do not know when we are going to get there. john larson said it very well, the proposaldl du jour. go back in the c-span archives, 1995, 1997, it is always dark before the dawn, if i can use a cliche. >> thank you for the plug.

if you want to look that up yourself, c-span.org. thank you for being on "newsmakers." [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> what would that have been like? to meet these people? >> erik larsen follows the rise of adolf hitler and the right in his new book, "in the garden of beasts." >> that is when i stumbled upon this historic not see germany. >> tonight on a "q&a." >> it takes a behind the stats look. the los angeles times called it

behind television viewing. and it solves mysteries. the original c-span documentary, the library of congress, sunday night at 9:00 eastern on c-span. >> news corp. chairman and ceo, rupert murdoch, testified before a parliamentary committee on tuesday. he was joined by his son, james. the hearing covers their knowledge of phone hacking and alleging payments made to police officers. they are also questioned about tampering that with the voice

mail of a murdered individual. this is two hours and 40 minutes. >> we would hope that it is not the case -- excuse me, can we not have that, please? >> thank you, mr. chairman. >> could we please?

[inaudible] >> anyone else? >> [laughter] >> after that brief interruption, we will begin. good afternoon, everyone. this is a special meeting of the committee, developed in 2009, where we took evidence to the extent of what had taken place at "the news of the world."

[inaudible] had been involved. new evidence may have vindicated the conclusion, [unintelligible] the parliament has been misled. there is an ongoing police investigation. this committee would not wish to defend that vote, however we are encouraged by the statements made this afternoon, in which the committee will help us to establish the truth. i welcome the chairman and chief executive officer of news corp., rupert murdoch, and the executive director of news international, james murdoch. >> we are more than prepared,

mr. chairman. >> you made the statement in july [unintelligible] tell us the extent to which you were misled. >> thank you very much. first of all, i would like to say how sorry i am, how sorry we are, particularly to the victims of the illegal voicemail interruptions. these actions do not live up to the standards that our company aspires to or around the world. we want to put things right,

make sure that these things do not happen again. my statement, around the closure of the newspaper -- >> i would like to say that this is the most humble day of my life. thank you. >> the statement around the closure of "the news of the world" newspaper was that the company had not been in full possession of the fact, referring to the emergence of new fact that largely came about at the end of 2010 as part of the due process of trials that reach to their point where document disclosure and evidence disclosure were apparent to the company and myself at that time. in deed, there was reason to

believe the potentially murky business involving "the news of the world." there was new evidence at the time. that is what i was referring to. subsequent to our discovery of that information, one of the civil trials of 2010, the company immediately wanted to look at the records involved. we started the investigation on that basis, as it is now under way. apologizing undeservedly, based

around this team managed by a high court judge to deal with legitimate claims coming from victims in those terrible incidents. those are the actions that were taken as soon as new evidence emerged. as far as vienna in full possession of -- as far as being in full possession of the facts, because of the civil trial litigation process, that evidence released emerged after us and the company acted swiftly and transparently, as much as possible. >> when this committee took evidence in 2009 [unintelligible] editor [unintelligible]

former editor [unintelligible] and chairman told us that there had been investigations without evidence found that anyone else had been involved. i take it that is not correct? >> the company relied on three things for a period of time, until the new evidence emerged. the company relied on the police investigation in 2007. this was before we counted back to that area, before i was involved. i became involved at the end of 2007. at the end of that time there was a police investigation and successful prosecution. the editor of "news of the

world" resigned. the police said repeated that there was no new evidence for them to reopen the investigation. they had had a report saying that there was nothing more sufficient at the time. the new company relied on the legal opinion of outside counsel that was brought in, respecting their view, they had issued a clear opinion that there was no issue to the legality of the individuals involved. for the company in 2008, 2009, it was not clear that there was a reason to believe that those matters were anything other than civil matters in the past. >> rather than knowing what was

going on? >> i do not have direct knowledge of what they knew and at what time. i can tell you that critical new facts, as i saw them, really emerged in the production of documentary information or evidence in the civil trial at the end of 2010. in the duration from 2008 to 2010, the length of time that it took for that real evidence to be there, i have to tell you that i know and i sympathize with the frustration of this committee. the facts could not emerge and could not have gotten to you faster. >> you have made clear that it

is the case, confirmation being given, that it was incorrect have you established who was involved? >> i am sorry, mr. chairman. >> who, besides [unintelligible] was involved? >> as you have made it clear, there have been a number of arrests of "news of the world close " employees. [unintelligible] made a comment in particular are around those individuals. >> have you carried out your end of the investigation to find out the extent of the involvement in phone hacking? >> we haven. we have established a group in the company cooperated with police on their investigation.

their investigation is broad with respect to journalistic practices. the policy and the direction that the company has given them is to cooperate solely with providing information and evidence that the company believes is relevant to that investigation. sometimes proactively. sometimes in response to this request. the fact that the provision of that information being established, with respect to getting to the right place in finding out the facts of what happened, the allegations are

coming in and moving forward to aid the police in the successful completion of the important and serious work they are doing. >> the departure for your company? >> there is no evidence that i am aware of that mr. brooks or mr. heaton had knowledge of. certainly her knowledge of those things has not been clear.

i have seen no evidence of impropriety. >> [unintelligible] is that right? >> yes. >> in october of 2010, did you still believe it when you said you would vigorously pursue the truth? >> yes. >> if you were not worrying bend? >> i do not know. >> you acknowledge they you were misled? >> yes. >> are you aware that in march

[unintelligible] police? >> i was not aware at the time. it had been amended. >> if you were anyone else in the organization? investigating it at the time? explaining why? >> let me say something. this is not an excuse. this is less than 1% of the company. distinguished people and professionals.

>> [unintelligible] what i am trying to establish is paca how your wrongdoing was -- establish is how your wrongdoing was established at the time. were you made aware of [unintelligible] >> [unintelligible] >> what did they do, subsequent to the arrest? >> i told the investigators and eventually they investigated

further. >> what did you do to investigate [unintelligible] ] box went to prison? >> he did not tell me that. >> [unintelligible] following the mosely case? >> i had never heard of it. >> [unintelligible] >> i did not hear that. >> the judge made it clear that there were two women involved in the case.

>> [unintelligible] >> know of your you case that brought this to your attention? -- none of your uk staff brought this to your attention? despite the fact dupont there was a 14 year prison sentence? do you think that that might be because they knew you would lead to the fingerprints? >> no. i cannot answer. i do none know. >> you said the lack of action described a remarkable state of affairs at news international? >> no. >> mr. murdoch, if you find your

chief supporter has a battering ram -- >> no. >> id is a simple case were you aware that news international was being investigated [unintelligible] >> [unintelligible] >> you claimed in " wall street journal" -- you claimed in "the wall street journal" the two had made a mistake. can i ask what mistakes you were referring to?

>> the presentation to the police. >> were you aware that news international [unintelligible] ] view is that these e-mails? d these e-mails? >> no. my understanding was everything had been sent. >> you are aware that board mcdonald qc was working on behalf of the international unit? >> yes. >> were you aware -- >> [unintelligible] >> were you aware that he found

evidence of hacking, breaches of national security and other serious crimes? >> they did, indeed. >> if you will allow me? >> i will continue. it is your father who has responsibility. but i will come back to you. since you were aware of these findings? >> we went to the senior officials of news corp., certainly. >> so, [unintelligible] >> no. >> do you -- >> they were not legal offices. [unintelligible]

>> the head of legal affairs at news corp. newspapers. >> [unintelligible] rebekah brooks? >> i forget, but i expect that with my son we were both in daily contact. >> [unintelligible] >> no. >> you were not informed? >> no. >> at no point were you aware that they were being paid payments? >> no. >> the u.s. hockey committee, if

there was a victim of the crime, having to address the matter of mr. taylor in some detail? >> my father became aware, after the settlement was made, in 2009, after the confidential settlement had become public and the newspaper reported afterwards. the understanding was that the settlement out of court was a civil claim, something of that nature we did not believe that a company our size, with responsible executives in the territory of the country, would be authorized to make. my father is the glow will chief

executive. >> mr. murdoch, when you found out that criminality was in debt met at open quote news of the world close "? -- "news of the world"? >> [unintelligible] justice taking place now. it has been discouraged. we were shocked, appalled, and ashamed when i heard about that case two weeks ago.

>> did you read our last report in the matter when we referred to the collective amnesia out of your reporters to give evidence to our committee? >> week under executives guilty of collective amnesia. >> a parliamentary inquiry found them guilty of collective amnesia and no one brought it to your attention? i do not know why you do not think that is not very serious. i thought someone would want to bring that to retention, that it would concern you. did they forget docks >> what has been obvious to many since 2009 that the packing was widespread, you knew for sure in january that the one reporter was false.

is that right? >> i forget the date. >> why was it an and sunday on the person to leave last january? -- why was edmonson the only one to leave? >> we have given all of our knowledge and everything to the police. they have not given us the diaries. we do not know what was in there. there was a page that appeared to be addressing that. >> perhaps to be helpful before the committee if you'd like to go through the particular

detail about why decisions were made by the management team at news international and the chronology. it would be more helpful, perhaps, if i could answer those questions as the chief executive of the regional businesses across europe. i have a somewhat more proximity to it. >> your father is responsible for the corporate wrongdoing. it is revealing in itself what he does not know and with the executives chose not to tell him. with respect to you, i will continue my line of questioning and come back to you later. mr. murdoch, why was not fired at news corp. and news international finally admitted that "news of the world" had been involved in hacking? >> it was up to the police to carry of the investigations which we were 100% cooperating

with. >> did you enable the company for phone hacking and now want responsibility for it now? no one was fired? the company admitted they had been involved in criminal wrongdoing and no one was fired. why was that? >> there are people within the company who apparently did it. we need to find them and deal with them appropriately. >> most of the individuals involved or implicated in the allegations have long since left the company. some that were still there, you mentioned one, exit the business as soon as evidence of wrongdoing was found. the process was set up in

cooperation with the police 8 them with any of the things that they wanted to do -- to aid them with anything. many of the individuals that were potentially indicated had already left and were not a part of "news of the world" executives and journalists at the time. many of home or not there in 2006-2007. some of them have already left. >> thank you. >> you are welcome. >> mr. murdoch, why did you choose to fire 200 people before pointing the finger or those responsible for running the company at the time of the illegality? >> when a plant closes down, it is natural for people to lose a job. we made every effort to see that those people were employed in other divisions of the company. if there were not a part of the

small group involved in the criminality. >> did you close the paper down because of the criminality? >> yes, we felt ashamed of what had happened. >> people like it to you and lied to the readers. -- liedto you. >> we had broken our trust with the readers. the important point was been broken trust with our readers. >> were you aware there were other forms of illicit surveillance being used by private investigators used by news international? >> other forms of -- >> illicit surveillance, computer hacking, attracting -- tracking. >> i think all news organizations have used private investigators in their

investigating from time to time. >> it could be shown to you that private investigators using -- working for news international used illicit surveillance, would you immediately introduced another investigation? >> that would be up to the police, but we would work with them. if they wanted to do it, they would do it. >> finally, when did you first meet alex? he worked for the company for 25 years. >> i may have shaken his hand, but they do not have any memory. >> i have a number of short questions. why did you enter the back door at no. 10?

>> because i was asked it to. >> were asked to go in the back door? >> yes. >> why? >> to avoid photographers, i guess. i just did what i was told. >> you had to go in the back door? >> yes. that was the chores of the prime minister, his staff, or whoever. >> that was the choice. >> so you're under direct instruction to go in the back door. >> i was asked if i could please come in the back door. >> i do not think my father had any business with the which courtiers going in the building. -- which door going in the building.

>> this was following the last general election. >> i was invited within days because of my support for mr. cameron. another conversation took place. >> and that was when you went in the back door? >> yes. i had been by to visit mr. brown many times. >> through the back door? >> yes. [laughter] my family had gone there many times. >> were there any preconditions by the support of your newspapers? >> i never guaranteed anyone the support of my newspapers. we had supported the thatcher government. we changed to support the labor

party, whenever it was. at the direct loss of 200,000 circulation. the on the conversations i had had with mr. blair, that i could remember, were out and about in europe. >> mr. blair [unintelligible] he visited you halfway around the world before the 1997 election. >> that was something mr. cameron are arranged? >> it is understood that the fbi are investigating 9/11 victims. have you commissioned an investigation into these

allegations? >> we have seen no evidence of that at all. as far as we know, if they do, we will treated exactly the same way as we treat it here. i cannot believe it happened to anyone in america whether it was someone at "news of the world," i do not know. >> i will come back to you, james, in a moment. if the fbi investigation is true, will you commission an investigation into them? >> absolutely. >> must be horrified by the scandal and that it has cost you the bskyb transaction and led to the closure of "news of the world." who do you blame? >> a lot of people had different agendas in trying to build up this hysteria.

all of our competitors in this country formally announced a consortium to try and stop us. they caught us with dirty hands and broke the story. >> so you think it was your competitors? >> i think a mood developed which made it impractical to move ahead. >> we have been very clear that serious allegations of wrongdoing have been leveled about "news of the world." we believe at "news of the world," the actions of people some years ago have fundamentally tarnished "news of the world the the world" had with their readers. this is a sincere regret of me, my father, and our company. the company's priority, very much so, is to restore the

trust, operate in the right way, to make sure that the company can be the company that it has always aspired to be, and the removal of the offer to make a proposal to bskyb shareholders, who is not news corp., is a reflection of the priority of moving forward. >> i understand what you're saying, but do you understand the people who have been the victims of "news of the world"

based on allegations? >> it is our absolute priority -- what happened that "news of the world" was wrong. we, and i, have apologized profusely for that, and my father has, as well. but these are very, very serious matters, and we are trying to establish the facts of new allegations as they come up of. we will work closely with the police to find out where the wrongdoing was and to hold people accountable. importantly as well, to the victims of the illegal voice mail interceptions, not just that we apologize, but we have admitted liability. the company has admitted liability and we have set out appropriate third-party payment schemes. these are all matters that we are fully engaged in. >> this is a very stressful time for yourselves. mr. murdoch, do you accept that, ultimately, you are acceptable for this whole fiasco? >> no. >> you are not? who are responsible? >> the people i trusted to run the company and maybe the people they trusted.

i worked with him for 52 years and i would trust him for my life. >> it are you -- are you aware that they did not register with the appropriate tax authorities? people were given money in order to get stories. did you notify the appropriate tax authorities about that? >> all of our financial affairs of the public accompany it are transparent, are audited, and the tax jurisdiction of the company works all around the world and works transparently and thoroughly. tax compliance is an important priority for any business. the company complies with the

law. >> does that include people on monthly retainers? >> i have no knowledge of separate people on retainers and their own tax arrangements. i can only speak for the company's tax arrangement to the best of my knowledge. we are a company that takes regulatory tax compliance, regulatory transparency, all acutely seriously. >> you're aware of the situation with tommy sheridan. they misled the jury in his perjury trial. your company had not disclosed information.

why is that? >> i do not have direct knowledge of that, and i apologize. if you have additional questions on that in the future, i am happy to supply written answers, but they do not have direct knowledge and i am not in position to answer those. >> just a couple more questions. james, could you please confirm or deny whether any news corp. company with the subject of an investigation? >> i have no knowledge of that at this point. >> could you also confirm or deny whether any news corp. company was the subject of an investigation by the financial services division? >> i do not believe so, and not to my knowledge. >> can you please confirm or deny whether any news corp. company was the subject of an investigation by hmrc? >> not that i know of.

we have an ongoing investment -- an ongoing discussion with them. i'm not aware of any investigations. the >> thank you. >> who made the recommendation to close "news of the world" to the board? i assume it was a board decision made by news corp.? >> it was the result of a discussion between my son, myself, and senior executives. mr. brooks, one morning, called the board of news corp., the entire board, to seek their agreement. >> the suggested it is because you felt ashamed. it was not a commercial decision to decide to close "news of the world?" >> no. >> moving on to the financial

arrangements. that the payments to mr. taylor were not notified because of the financial threshold? could yote i understand you had to agree to the payments to mr. taylor. was that a financial or managerial decision? that was one instance of the 2007 trial. you must think about what i knew then and what the information was in the context. the underlying interception and was not a disputed facts. secondly, it was the advice, and

further, it was the advice and the clear view of the company and it is litigated that the company was almost certain to lose that case because the underlying fact was not in dispute. thirdly, the company sought outside counsel to understand of the case for litigated and lost, which was a great likelihood, what the financial quantum and be and what it would cost the company. it was advised that with expenses, legal expenses and damages that it could be between 500,000 pounds and 1 million pounds, thereabouts. i think the advisor was 250,000 pounds plus expenses and the litigation costs. lastly, in the context of 2008, which was my first real involvement with any of these issues, there was no reason at the time to believe that the

issue of the voice mail interception was anything but a settled matter. it was in the past out to the successful prosecution of the two individuals that we discussed as well as the resignation of the editor. the out-of-court settlement was made in that context. it was within the authority, as i've understood it, of the news international to be able to make those out of court settlements without blowing -- going to the global level company. i was the regional head for europe and asia of news corp. and i directed the that it was all right to not get involved in anything about, but those were the things that were known. >> if i could just add? my son had only been with the

company for a matter of the few weeks. >> it was a deal months. i had come back at the end of 2007 in early december, but some plant -- sometime in 2008. >> given you were new to the company -- weeks, months, i do not want to have a father-son argument about that -- what level of financial payments could other news international executives, people like colin myler or tom crone or rebekah brooks, have sanctioned without recourse to you as the chairman? >> generally speaking, the way that the company will operate, as any company will operate, is within certain financial parameters from a financial planning perspective. we will look at a budget for a year, much like a house will manage its budget, and say, "how much money do we have to spend, and how much money does a particular company or part of the company or department have

to spend?" as long as they stay within those guidelines, the belief is that they should be empowered to make those judgments, to spend those moneys and achieve the ends that they can. i do not have at the tip of my fingers the precise financial authorities in that, but i can discuss with you after the committee hearing what exactly you would like to know and whether or not it is right to come back to you with that. >> what level of financial pay- out would have it have taken to require an authorization from the board of news corp? >> i think that, for the full board, it is in some millions, but i do not know the exact answer there. >> do you know how much has been paid out to people, authorized by your executives? >> paid out in what way, dr coffey? >> paid out as settlements. >> legal settlements? i do not know the total number, but around the world it is

customary to reach out-of-court settlements in civil litigations and civil matters, and, rather than go through the lengthy and sometimes expensive litigation process, with the risk that that often entails, it is customary to try to reach out-of-court settlements in many cases. >> i should just add that we have a very strong audit committee at news corporation, which would know about this. neither of us are members of that. they are outside directors, and they review all these things. >> thank you. building on that then, how is it possible to make payments to people if they do not invoice you or if they are not an employee of new corps's subsidiaries? >> i am sorry, dr coffey? >> how is it possible to transfer cash or some other form of remuneration to people who do not invoice you or who are not employees of news corps's subsidiaries? >> i do not know the exact arrangements of that.

i don't do that myself to tell you how that is done, but sometimes, in certain instances, it is appropriate for journalists or managers in a certain environment to have the ability to use cash in some instances. it is customary, however, for them to record those, and all of the cash expenses, as well as invoice expenses, should be looked at and recorded. >> so things like use of petty cash -- that could be quite big sums of money or small -- at the moment you just record that the journalist gave it to somebody. >> yes, and i don't have direct knowledge of all of those arrangements. >> i was going to ask if payments could have been made to family members of those alleged to have been hacked and similar, but is it possible that other forms of remuneration can be used in your company apart from cash and bank transfers?

i am talking of things like travelers checks, vouchers and things that can be redeemed for cash. >> i don't have knowledge of that. >> just looking at some of your corporate governance -- page 2 and page 4 of your own code -- it mentions directors, employees and officers of news corporation acting to the principles set forth, including consultants, agents, suppliers and business partners adhering to the standards. it says, "we may never ask a third party to perform any act that would violate these standards." can you tell me a little bit more, especially on the financial side, how you, as an organization, try and make that happen? >> how that would work is that each newspaper has an editorial manager -- the titles vary. they have to approve the expenses claims of every reporter.

a reporter has no authority to pay money on his own. >> just to clarify, the managing editor's office often manages a lot of the expenses and budgets, and is directed to do so with propriety. >> do you require your executives to make annual statements that they have abided by your codes of conduct and ethics? i used to work for a family- owned company. >> every employee, every colleague around the world of news corporation receives the code of conduct. it is a pamphlet that has some detail in it -- not too much, so that people read it. with respect to what ethical conduct is required -- >> we would be happy to make it available to you. >> we would be very happy to make it available to you. it is about ethical conduct, the law, breaking the rules and so on. everyone who becomes an employee is required to do that. our legal counsel also internally conducts workshops

around the world with staff, from mumbai to manchester, around those rules and code of conduct. that is something we try hard to communicate as crisply as we can to everyone in the business. >> i appreciated mr. murdoch's statement that you do not appreciate the statement you have. without risking to suppress investigative journalism, does this make you think about how you approach your headlines in the future? when you think again about what you're headlines are saying? >> i think that we certainly will. i am not aware of any transgressions. as a matter of taste, it is a very difficult issue we have in

this country with a variety of voices and it is very competitive. i am sure there are headlines which can occasionally give offense. it is not intentional. >> i think it is important to say one other lesson, if you will, from all of this for us. it is clear that we do need to think, as a business and as an industry, in this country more forcefully and thought police about our journalistic ethics and conduct should be not just for news international but also for the industry as a whole. what sort of governance should be around this area? last week, we welcomed the prime minister's announcement of

a inquiry into journalism ethics and the relationship with police, politicians, things like that. i think that is a really good thing for the country and for all the interested parties to engage in fully. one of the specific actions that we have taken to try and be as attractive as we can around this is that we have set up a management and standards committee that is outside of the actual management of our publishing company and reports to the independent director through our global public board precisely to look at this issue around, first, the specific issues of how we cooperate with the investigations come to deal with allegations of wrongdoing, and get to the bottom of it. also, and importantly, how we coordinate and cooperate and beeper actively engaged with the judicial inquiries and how we start to set a code of conduct and a code of ethics that we think, and that it

thinks, is something that can be a paragon for all of our newspapers, the industry, and something that really has teeth and can hold the company to account. and we think it will be much better way to go in the future. we would like come over the next six months, one year, and years, to really be judged on the actions that the company takes to put that right and put that in place. >> i would just like to say, if i may, that this does not take away from our apologies or anything. this country does greatly benefit from a competitive press. it is sometimes very inconvenient to people.

i think we are better and stronger for it. >> before i bring in my next colleague, can i come back to this? is it your intention to launch a new sunday tabloid newspaper? >> there is no decision made on that. >> for the moment, there is no news international title that will come out on sunday? >> no immediate plans for that. >> to have spoken in the past to move to a seven-day news room. >> we leave all of those options open but that is not the company's priority now. in the last week, it has, in the company, but it is my father's direction and my

direction to say this is not the time to be worrying about that. the company have to move forward on all of these other actions and really come to grips with the facts and these allegations and understand them as fully as we can. >> can i appeal to members to try to keep it brief with their retorts? >> in your statement on july 7th, 2011, mr. james murdoch, you said the company paid out of court settlement approved by you and you did not have a complete picture when you signed. what do you know now that you did not know then? >> essentially, the new information that emerged that is critical here is the intermission that came out of the ongoing process of civil

litigation in 2010. at the end of 2010, the presentation of evidence had not been in our possession previously from this civil litigation that might in the circle definitively, or made it very apparent, that the circle was wider than the two individuals, mr. goodman and others come up from previously. that permission was critical. to go back to previous testimony earlier today around the set up with mr. taylor, the commercial and legal rationale, if you will, was very clear. the underlying fact was not under dispute. the advice was very, very clear as to what sort of damages could be expected to be paid and it was quite clear and likely

that, it's litigated, the company would lose that case. in the context that none of this other information, one full year before the other allegations in the press arose, there was no reason to believe that the time that it was anything other than in the past. knowing the than what i know now, what i have still directed to negotiate to settle that case? i would, actually. i would have a couple it with the other actions that we have taken since the new evidence emerged in september 2010 which would be to immediately go and look at whenever we could find internally around the individuals involved, to immediately contact the police about an permission that may be of great interest to them, to

put in place the process, which we did in early 2011, at around admitting liability to the civil litigants and putting a process in place to get to the bottom of what legitimate allegations there were, apologizing to the victims of the boys mail interception, and have a system of compensation there. if i knew then what we know now, to the benefit of hindsight, we can look at all of these things. if i knew then what i knew now, we would have taken more action and move faster to get to the bottom of these allegations. >> what are the settlements paid by news international, news corp., or newspapers? >> i do not recall. i would imagine it would be news international, but i am sure we could provide you with

that intermission. >> what advice did crone give you with mr. taylor? >> it is as i described it. the underlying facts in the case -- >> were you aware and involved in the criminal act of phone hacking? were you aware the case involved the criminal act of a phone hacking? >> my understanding was the litigation was for damages for the illegal voice mail interception. this was in the first half of 2008. >> in 2009, they informed us that they decided to settle mr. taylor's claims based upon the advice from the external legal advisers.

was this by pharaoh and co solicitors? >> they have done work for us. i do not know which external council they engaged. >> the advice i had was oral from mr. crone. >> what was the advice? >> as i described it. outside legal advice had been taken with respect to the quantity of damages. there'd vice was that the case would be lost and in the absence of any new evidence, certainly not made aware to me, and in the absence of any new evidence that this was simply a matter of doubt was to do with events that came to light in 2007 before i was there and it was a matter of the past. the police, as well, had closed their cases saying there was no new evidence.

that was after the authorization of the settlements and advise we sought from signora outside counsel with respect to the quantum of damages we could be expected to pay which was going to be 250,000 pounds plus expansion in litigation costs to be between 500,000 pounds and 1 million pounds. afterwards, you may be have different intermission. it was not afterwards. it was before >> when you approve the taylor settlement, you say you did not have all the facts. what did you know now that you did not know then?

>> respectfully, the key fact, the key evidence that came to light at the end of 2010 after the lengthy due process of the civil litigation revolving around these matters took to court, it was that process that unearthed the key evidence there and it was really only after that then that they said we should restart the investigation as soon as we have the new information at the end of 2010 which indicated to was that there was a wider involvement. we acted on immediately. >> tom crohn said that he did not know why he left the newspapers. can you clarify why he was asked to leave after 26 years of service? >> last week, -- two weeks ago, i guess, "news of the world" published its last newspaper. the company believed, and the management of the company believed, that it was time to part ways. i was not involved in the direct discussions with ham, and i cannot comment on their nature or content. >> there was a story last week

that news international subsidized coulson's wages after he left? >> i have no knowledge of his wages after he left the company's employment. >> are you aware of the term "willful blindness?" >> do you care to elaborate? >> it is a term that came up in the enron scandal. it states that if there is knowledge that you could have had and should have had but chose not to have, you are still responsible. >> mr. standards -- sanders, is there a question? >> are you aware of that phrase? >> no. >> now you are.

>> we were not ever guilty of that. >> when we had an inquiry in 2009, the evidence given by news international executives it was rather hopeless, really. the game plan was to tell us that they did not know anything, could not remember anything, and did not know anyone who did. just so we can get off to a start come out what kind of coaching have you had today and what was their advice? >> with respect to today, after scheduling this appearance, we took some and vice about what the context of what this setting would be. this is my first time in a

committee meeting like this. mostly logistics' on what sort of questions would be asked, but we were advised fundamentally to tell the truth. we were told to come be as open and transparent as possible. that is both my and my father's intense. we hope we can assure you that is bad is happening. >> mr. murdoch, a senior, you seem to indicate that you have had a rather a hands-off approach your company. the point he made was that "news of the world" was less than 1% of your entire worldwide business and would not be expected to know the ins and outs of what was going on. could you give us an illustration of how often you'd speak to the editor of your newspapers? how often you speak to the editor of "the sun" for example?

>> a very seldom. sometimes i would speak to them on saturday night just to keep in touch. i speak to the editor of "the sunday times" every sunday, not to influence what he has to say at all and i am very careful about making a remark to imply otherwise. i am not really in touch. the editor i spend the most time with is the editor of "the wall street journal." to say that we are "hands off" is wrong. i work a 10-12 hour day.

i cannot tell you the multitude of issues that i have to handle every day. "news of the world," perhaps, i lost sight of because it was small in the general framework of my company, but we are doing a lot of other things. >> if i could help you out here, if someone told me that you would speak to the editor of "the sun" daily or twice a day, we recognize that description? >> no. >> you would not have traditionally spoken to the editor of "the sun" that many times? >> i would like to, but no. >> i understand it you would not speak to the editor to influence what they print, but i am intrigued as to how these

conversations go. i would imagine it. something along the lines of, "anything to report? anything interesting going on?" and the editor says, "a standard week." we paid gordon taylor 600,000 pounds. >> he never said that sentence. >> surely with your weekly conversation, something as big as bad, paying someone 500,000 pounds, you'd expect them to drop it into the conversation sometime. you would not expect them to say that? >> no. i would discuss things with him maybe once a month. >> about was not on the agenda, what was? -- if that was not on the agenda, what was? >> i would ask what was doing.

i would ask about a story exposing "x" or "y," but nothing special. he may have referred to the fact how many pages of football. >> but not a 500,000 payoff? that's interesting to someone like me. james, would you acknowledge that you overpaid them? >> i cannot talk to the involvement with mr. clifford because i was not involved. with the taylor piece, i made a decision on council and the and vice involved in going back to what we knew in 2008 and looking at that advice.

looking at the context of the time, and that was three years ago now. it was a decision that, given the context, was the decision that i would still stand by, i think. >> apparently, there was a contract with mr. clifford which was canceled by mr. coulson. >> i do not know anything about that, if you have any knowledge of that. >> we might come back to that in more detail. 600,000, and gray got his phone hacked and he hasn't even

gotten 50,000. it seems bizarre that someone can be hacked and get 600,000 and someone else gets 20,000. one instance was out in the open and everyone knew about this, and the other one was paid when it was trying to be kept rather quiet. in do you not see that to most people looking at it that it smells a bit? >> i understand where you're coming from and i understand. these are big sums of money that we are talking about. 200,000, 600,000.

that is a lot of money. why would a company do that? i would as go back to my answer to mr. sanders, just to be precise about the chronology. mr. davis, and would like to answer this question. my understanding is that the 60,000 settlement or judgment in the moseley case, which was after the advice given around the gordon taylor settlement, is an importer chronology. courts and judges have set a different standard here. what we knew, and what i knew at the time, is that we had a senior distinguished outside counsel the we have gone to to say, if this case were litigated and we were to lose the case, what sort of damages could we expect to pay? the company received an answer that was substantial.

>> it the example was at 250,000 in the settled for 600,000? >> the 600,000 concluded it damages, legal fees, and an estimation of what it would have cost otherwise. it was damages plus costs that brings you to that number. with respect, it is important to be clear about that because they are big numbers. >> i want to concentrate on payments made to your staff. go back to the trial of clive goodman. he was pleading guilty to a criminal offense. did news international paid clive goodman's legal fees for his trial? >> i want to be clear about the

chronology. i did not have a firsthand knowledge of that. my involvement in these matters started in 2008. up until 2007 in december, i was chiefly involved in a public company. >> who did know? >> if i could try to enter the first question first? it is customary, whether it is with employees or other litigation, to pay some legal expenses on behalf of those to try and bring all of the evidence and that has all been done in accordance since any involvement by have had with legal advice about the proper way to do things. i can not speak to the 2007 arrangement. >> he employed the services of a q.c.

i do not know if this is a lawyer at news international, but he is one the most eminent lawyers in the country, similarly one of the most expensive, and he was the go to a lawyer for celebrities. but it seems odd to me that a journalist from "news of the world" who is pleading guilty use is probably the most expensive lawyer in the country, which leads most people to expect that the legal fees and are being paid for by himself but were being paid for by news international. given that he was pleading guilty to a criminal act, phone hacking, which is a gross misconduct, why in the world was news international even dreaming about paying the legal fees for someone who was engaged in criminal activity and

committed something that was clearly gross misconduct? >> mr. davis, i did not have any direct knowledge of the specific legal arrangements with mr. goodman in 2007, so i cannot answer the specifics of that question. what i can say is, because i have asked the question as well more recently than that, with respect to the company pays, contribution to legal fees do we make as a company, so on the high and so forth, and i can tell you that, in asking the question, i have been surprised legal counsel tells us it is customary to sometimes make contributions to the legal costs of either co-defendants are defendants in related matters.

i have no direct knowledge of that particular instance that you mentioned. if you have any specific questions, perhaps begin follow-up with you on that and i am happy to do that. >> these are issues that go back sometime and i am surprised to have not followed up on them. were any payments made subsequently to clive goodman? did news international make payments to the two peoples following their trial? >> that is a good question and it is specific. to my knowledge, upon asking, because the allegations made them legal fees have been paid after that time in 2007-2008, i asked the question and i was very surprised to find that company had made certain contributions to legal settlements. i do not have the details -- and not legal settlements, but

legal fees. i was surprised. i was very surprised to find out that had occurred. they were done, as i understand it, in accordance with legal counsel on the strong advice. >> who at news international agreed? who signed the checks? who agreed to make those payments? >> i do not know here. >> to talk about the managing editor, would it have been his decision? >> i am happy to go back and look at it, but it is not something that came to my attention. >> this would certainly not having to do with the management. >> it would be below the managing editor? >> this would have been legal advice about how to handle

litigation. do not have direct knowledge about the current status of those. i was as surprised as you are to find that some of these arrangements had been made. >> mr. murdoch, sr., would hinton have agreed? >> it could have been. >> who else could it have been? >> the chief legal officer. signing checks, it could be an assistant c.f.o., but on the instructions of the chief legal officer. >> whose decision was a to get rid of the -- tom crone? >> the chief executive, mrs. brooks. >> senior level personnel decisions would have been made

by her. >> allegations were made in "the guardian" and he left soon after. how did he leave the company? >> that i don't know. at the time, that would have been a "news of the world" matter. >> why did les hinton resign? >> he resigned, sadly, last friday following rebekah brooks' resignation saying he was in charge of the company during that period.

he said he felt he must step down. >> were either les hinton or rebekah brooks asked to leave? >> they asked. >> why did you not accept rebekah brooks' resignation the first time? >> i believed her. >> she insisted. she was suffering extreme anguish. >> can you tell us how much of these characters have been paid off? how much they have been given in a financial settlement following their departure from news international? >> in the case of mr. hinton, it would be considerable including his pension for 52 years of service.

>> 5 million? 10 million? >> that is confidential. >> any confidentiality in their pay off that they're not supposed to speak about what happened during their time and your company or what they know? >> mr. davis, the settlements are agreements when someone resigns or leave the business, in circumstances like this, there are some commercial confidentiality agreements but nothing that would stop or inhibit the executive from>> thy confidential. >> is there any confidentiality in their pay-off that means that they are not supposed to speak about what happened, their time at your company or what they know? >> no. >> mr davies, in the settlement or compromise agreement when somebody resigns or leaves the business in circumstances like this, there are commercial confidentiality agreements, but nothing that would stop or inhibit the executive from co-

operating fully with investigations, from being transparent about any wrongdoing or anything like that. it is important to note that these agreements are made on the basis of no evidence of impropriety. if evidence of impropriety emerges or was there prior to that departure, you would have a different piece. that is an important point to be clear about. >> it seems on the face of it that the news of the world was sacrificed to try and protect rebekah brooks' position at news international. in effect, instead of her departure being announced, the news of the world was offered up as an alternative to try to deal with the whole thing. do you now regret making that decision? do you regret closing the news of the world to try to save rebekah brooks? in hindsight, do you wish that

you had accepted her resignation to start with, so that that paper with a fine tradition could continue and all the people who are now out of work or are struggling to find a job could still be in work? >> i regret very much the fate of people who will not be able to find work. the two decisions were absolutely and totally unrelated. >> so when you came into the uk and said that your priority was rebekah brooks, what did you mean? >> i am not sure i did say that; i was quoted as saying that. i walked outside my flat and had about 20 microphones stuck at my mouth, so i'm not sure what i said. >> you were misquoted, so to speak. >> i am not saying that. i just don't remember. >> mr davies, it is important to remember that the closure of a newspaper with a history of 160- some odd years is a grave and serious matter of regret for us and for the company. but much more serious than that is the violation of privacy, and the hurt that certain

individuals at news of the world caused to the victims of illegal voicemail interceptions and their families. i can tell you that i advocated at the time that this was the step that we should take. this was a paper and a title that had fundamentally violated the trust of its readers. it was a matter of great regret and real gravity, but under the circumstances and with the bad things that were done at news of the world some years ago, it was the right choice for the paper to cease publication. it is important to note, and i want to be clear with the committee on this, that the

company is doing everything it can to make sure that we find re-employment, wherever we can, for journalists and staff at the news of the world who had nothing to do with any of these issues and who are completely blameless in any of these things. many have done tremendous work journalistically, professionally and commercially for the business. the company is being as generous as we can under the circumstances, it is being as thoughtful and compassionate as we can for them and their families to get through this, but it is a very regrettable situation, and we did not take it lightly in any way. >> you have made that clear. members, i am going to ask for brevity. i don't want to cut anyone off,

but we have some way to go. >> i want to return to how john opened the session and the evidence that was given to us previously. mr davies omitted to ask one key question. mr james murdoch, through all the civil actions, have you-not you personally, but your organisation-been paying glenn mulcaire's legal fees? >> as i said earlier in answer to a question from mr davies- [interruption.] >> let's keep it short. yes or no? it is a yes or no question. >> i do not know the current status of this. you asked the question have i paid all mr mulcaire's legal fees. >> have you been paying legal fees for glenn mulcaire during the course of the civil actions? >> i don't know the details of the civil actions, but i do know that certain legal fees were paid for mr mulcaire by the company. i was as surprised and shocked to learn that as you are. >> can you understand that people might ask why a company might wish to pay the legal fees of a convicted felon, who

has been intimately involved in the destruction of your reputation, if it were not to buy his co-operation and silence? >> no, it is not. i can understand that, and that is exactly why i asked the question-when the allegations came out, i said, "how can we? are we doing this? is this what the company is doing?" on legal advice-again, i do not want to be legalistic; i am not a lawyer, but these are serious litigations and it is important for all of the evidence from all of the defendants to get to court at the right time. the strong advice was that, from time to time, it is important, and customary even, to pay a co- defendant's legal fees. i have to rest on counsel's advice on some of these serious litigation matters. >> is the organisation still contributing to glenn mulcaire's legal fees? >> as i said earlier, mr farrelly, i do not know the precise status of that now, but i do know that i asked for the company to find a way for those things to cease with respect to these things. >> will you let us know? >> i am happy to follow up with

the committee on the status of those legal fees. >> this is a serious question, mr murdoch senior. is it not time for the organisation to say, "enough is enough"? this man allegedly hacked the phone of the murdered schoolgirl, milly dowler. is it not time for your organisation to say, "do your worst. you behaved disgracefully. we are not going to pay any more of your costs."? >> i would like to do that. i do not know the status of what we are doing, or indeed what his contract was and whether it still has any force. >> if the organisation is still paying his fees, will you give the instruction now that that should stop? >> provided that it is not in breach of a legal contract, yes. >> i want to return to the question of making statements to parliament without being in full possession of the facts.

during our 2009 inquiry, all the witnesses who came to us testified to being intimately involved in, in particular, a huge trawl of e-mails after the arrival of colin myler. it seems that, over the past few days, they have been rather quick to try to distance themselves from that investigation, according to some of the quotes in the newspapers. it was stated to us clearly that that trawl, that investigation uncovered no new evidence: it was still a lone rogue reporter. mr. james murdoch, can you tell us about the file of e-mails, the so-called internal report that was discovered, allegedly- we read in the pages of the sunday times, a great newspaper-

in the offices of harbottle & lewis. can you tell us a bit more about when that was discovered, when you first came to know about it and what is in it? >> i first came to know about that earlier this year, in 2011. >> can you be more precise about the time? you have a great grasp of knowledge. >> it would have been in the spring time. i do not remember the exact date when i was told about it. >> before april? >> it would have been april or may. i can try to find meeting schedules and what not and come back, but it was a few months ago. i can speak a little bit to it, but as to the activity that was

carried out in 2007, again i piece this back together from the past-it was before any of my involvement. at the company at the time that i think you are referring to, there was an unfair dismissal case that was brought by mr goodman and that was the basis for conducting-it was right about the time of the convictions. it was all in that period of time. >> that was what we inferred, as stated in our report last year, despite the assurances as to the other motivations. >> it was right at the time mr myler had come in. codes of standard had been talked about-this was before my time-all of the 2007 business was there, and an investigation was done, or a fact-finding piece around this. outside counsel was brought in- it was harbottle & lewis-by the company at the time. i understand that the legal executives-i think it was mr chapman at the time, along with mr myler, who testified to this effect-took a report.

from then, the opinion was clear that as to their review, there was no additional illegality in respect of phone hacking in that file. as to their review, that opinion was clear. the company really rested on a number of things from then on. i certainly know that in 2009, when additional allegations came in the summer, the company really rested on a handful of things. >> we know this. i want to move right up to date to what was discovered in the offices of harbottle & lewis and when it was discovered. >> in 2010, after the civil litigations had put a spotlight on or unearthed, if you will, to us, to the company, additional new evidence and new information that had not been there before and the police investigation started off, one of the things that was gone back and looked at-i suppose it was in the spring, by senior people at news international-was that file. it was re-looked at; it was opened up and looked at, and it was very rapidly brought to our attention that this was something that would be- >> when did this happen? when was this looked at? >> again, this is between may and-april, may and june in that

period. >> who looked at it first? it was reputedly will lewis. >> the people managing the work on behalf of news international from early this year have been led by mr lewis. that is correct. >> what is in that file? it has been reported as a collection of 300 e-mails, or a loose-leaf binder-what is it? >> as you know, there is an ongoing criminal investigation. i think it would be wrong of me to talk about specific information or evidence that is subject to and could make problems for the police in doing the important work that they are currently doing. >> i don't think it is going to cause problems for the police if you tell us whether it is a4, foolscap, e-mails, in a ring binder, loose-leaf-what is it? >> it is paper. i think there are some e-mails, some documents- >> have you read it all?

>> i have not read it all, but some e-mails, some things in it have been shown to me. >> what was your reaction? was there an expletive that you used when you first read some of these e-mails? >> i try not to utter expletives. >> but when you do-occasionally, when you do. >> my reaction immediately was to agree with the recommendation of the executives involved, which was that this was something that we should bring to the attention of the police with respect to their ongoing investigations, and perhaps new ones. >> when was it given to the police? it has been reported as 20 june. >> i believe it was in june, after we informed the board of the company as well. >> that date is accurate. >> i believe it was june, yes. >> the sunday times-a great newspaper-painted a picture on 10 july, from this file, that a

cabal of six so-called gatekeepers on the news desk dealt with glenn mulcaire. it named them as alex marunchak, greg miskiw, clive goodman, neville thurlbeck, james weatherup and ian edmondson. do you recognise that summary from the file that you have had a look at? >> mr farrelly, respectfully, i would ask you to please understand that detailed questions about any of the evidence or information that we have passed to the police in relation to their ongoing criminal inquiries are difficult for me to answer. i would appreciate it if we could allow the police to undergo the important work that they are undergoing. there is a process that is important. we are co-operating with it. we are providing information on a regular basis-the company is providing information on a regular basis, as needed by the police. i really believe that we have to allow the police to conduct

their investigation and hold the people who did wrong to account in this area. >> if we were to comment on anything now, it could result in guilty people- >> i fully understand that. i will respect that. clearly, the descriptions in the press-they are on the record, including in the sunday times- mention that the e-mails implicate andy coulson in knowledge of payments to the police, but i would not expect you to comment on that. i will turn to the harbottle & lewis letter that was provided to us by rebekah brooks as evidence during our inquiry that this trawl of e-mails had produced nothing more. that letter from lawrence abramson, then senior partner of harbottle & lewis, mentioned that e-mails of andy coulson, stuart kuttner, ian edmondson, clive goodman, neil wallis and

jules stenson had been reviewed and that nothing had come to light that contradicted that it had been a lone, rogue reporter working with glenn mulcaire. knowing what you know now from the other evidence you have discovered, have you looked back in detail at the basis on which harbottle & lewis wrote that letter and why they gave such a clean bill of health? >> all i can say is that, having looked at some of the things in that and the advice of the senior people inside the company who looked at that more recently, it was the company's view, self-evidently, that it was right to bring this to the attention of the police and go forward. that opinion from the counsel was something that the company

rested on. it was a clear opinion about a review that was done around those records, and in conjunction with the police continuing to say that there was no new evidence and that there was no reason to open a new investigation, and in conjunction with the pcc saying that it had done its review and its inquiry and that there was nothing new there, it was viewed that it was a settled matter. it was only when new evidence emerged that those three things began to be undermined. >> in a follow-up to the session, could you provide us with the instructions that were given to harbottle & lewis, as well as the extent of the information that was given to them out of the totality of information that was available? that information would help us conclude what really happened. >> if additional detail is required around those legal instructions, we will consult and come back to the chairman with a way to satisfy you with the information that you'd like

to have. >> clearly, we spotted in our report that this view coincided not so much with mr myler's arrival, but with the timing of the industrial tribunal actions that clive goodman and glenn mulcaire were planning. that begged the question of why these six individuals were named in there. do you know why it was limited to these six individuals? >> why it was limited to those six individuals, i don't know. i was not there at the time and i cannot tell you the circumstances and the conversations that people had with harbottle & lewis or the terms of reference of that, but it had been viewed after the fact that it had been a thorough look at information, and based on that review, that opinion was issued. >> neville thurlbeck is one

omission that immediately jumps out. >> again, in hindsight we can all say, "if somebody had looked at this," or, "if somebody had known something that was not known at the time," but i cannot comment on why the terms and the scope were what they were. >> the proceedings by goodman and mulcaire for unfair dismissal, notwithstanding their criminal conviction, clearly never saw the light of day because they were settled beforehand, so we do not know what they were planning to serve on you. do you know what sorts of allegations they were making? we can only imagine that they were saying that such-and-such a person knew and such-and-such a person knew. have you satisfied yourself about what allegations they were making? >> many of the individuals you mentioned are currently subject to criminal investigation and some of them have been arrested recently. these are important matters for

the police. it is important that i do not stray into or that i am not lead into commenting specifically about individuals or allegations made in the past. >> the question was whether you had satisfied yourself about what clive goodman and glenn mulcaire were alleging in the discussions and negotiations that led up to the settlements, if they brought industrial tribunal proceedings against you. that was the question -- not about what they were alleging, but whether you have satisfied yourself about what they were alleging. >> as to glenn mulcaire, i am not aware of allegations at the time and other things. as to goodmanagain, this was in 2007, before i was thereit is my understanding that that is what harbottle & lewis were helping to deal with, and that that opinion did satisfy the company at the time and we, the company, rested on that opinion for a period of time. >> i take it you would like to

take the opportunity to withdraw this letter as an accurate portrayal of what really went on at the news of the world. >> is that the letter of >> it is the harbottle & lewis letter. >> i am glad you have asked about it, actually, because it is a key bit of outside legal advice from senior counsel that was provided to the company, and the company rested on it. i think it goes some distance in explaining why it has taken a long time for new information to come out. i would say, mr farrelly, it was one of the bases for, if you will, the sort of pushback that the company made against new allegations. it was one of the pillars of the environment around the place that led the company to believe that all of these things were a matter of the past and that new allegations could be denied. >> again, the question was different, mr murdoch. i asked you whether this letter, which is still lying on the record as evidence given to this committee, has not, for whatever reasonno doubt, you will say it is to do with the criminal investigationbeen withdrawn. would you like to withdraw it? >> respectfully, i am not aware of the legal technicalities of withdrawing that or of submitting it on the record. i think it is a relevant document in trying to understand how news international was thinking at the time. >> we will ask you the question

when >> i would say no, but i can come back after taking counsel and seeing if it is a better idea to do it. >> i want to wind up, but i have a few more questions. as you have described it, and as colin myler described it, the e- mail investigation was carried out by the it department and it was overseen by the director of legal affairs, jon chapman, and the human resources director, daniel cloke. is that your understanding? >> pardon me, what was the question? is it my understanding that? >> the investigation itself, which you and colin myler have described to us, was carried out by the it department and overseen by the director of legal affairs, jon chapman, and the human

resourcespersonneldirector, daniel cloke. is that an accurate description? >> that is my understanding. >> can you tell us why jon chapman has left the organisation? >> jon chapman and the organisation decided it was in mutual interest to part ways. i think one of the pieces here as well is for the company to move forwardi think this is importantand even if there is no evidence of wrongdoing or anything like that, and no evidence of impropriety, many individuals have chosen that it is time to part ways. i was not involved with the discussions with mr chapman. >> you have no evidence of any complicity by mr chapman to cover up the existence of the file that was belatedly discovered. >> i do not have that. >> can you tell us the employment status of daniel cloke? >> mr cloke left the company

some time ago and i don't know what his employment is. he is not in the business. he was the director of human resources for a number of yearsnot that many, actually; i am not surebut left over a year ago. i can follow up that status with you. >> okay. referring just very quickly to the witnesses who came to us, again in respect of the file that you discovered this year, regarding les hinton, when did he first become aware of this collection of e-mails and paper, as you called it, that clearly rendered the evidence given by him to us misleading? when did he know? >> i cannot speak to mr hinton's knowledge. are you referring to 2011 or 2007? >> the document that was left >> in 2007. i cannot speak to his knowledge, but i know that mr hinton was

aware of the work that had been carried out, and i think he has testified to this committee to that effect. >> mr murdoch senior, have you asked les hinton whether he knew about this document? >> no. >> why not? >> which document are you talking about, mr farrelly? >> the document that you discovered in april or may in the offices of harbottle & lewis. >> i have not asked him, but i also thinkas he has testifiedthat he, as chief executive of news international at the time, would not have been expected necessarily to read x- hundreds or thousands of emails, but would rely on the opinion of counsel about what they had done. >> was colin myler aware of that evidence lying with harbottle & lewis? >> i cannot speak to other individuals' knowledge in the

past. i simply don't know. >> would tom crone? >> i simply cannot speak for them. >> and stuart kuttner? >> the same goes, mr farrelly. i simply can't speak for them. >> and rebekah brooks? >> i simply cannot speak for their knowledge. i know that mrs brooks, when she was chief executive, was one of the people who brought it to my attention as a new thing. >> i am just going to wrap up this questioning. we are left now in a situation where you, having looked into this affair and co-operated with the police, cannot tell us who lodged the file with harbottle & lewis, who was aware of its contents, and who kept you from being in full possession of the factsevidence that is clearly now being submitted to the police, but that clearly contradicts all the assurances that we were given, not in one but two select committee inquiries.

i hope you would agree that that, frankly, is unsatisfactory. >> mr farrelly, i can say that the company at the time engaged an outside law firm to review a number of these e-mails. they were provided to the law firm, as i understand it. they were reviewed and an opinion was issued to the company based on that review by a respected law firm. the opinion was clear and the company rested on that. i cannot speak to individuals' knowledge at different times, because i don't know. what i do know is that the company rested on that, rested on the fact that the police told us that there was no new evidence and no reason for a

new investigation, and rested on the opinion of the pcc that there was no new information and no reason to carry it further. it was not until new evidence emerged from the civil litigations that were going on that the company immediately went to the police, restarted this, and the company has done the right thing in that respect. >> that was evidence lying in your lawyers' possession all the time. it is not simply evidence that emerged through litigation. >> the harbottle report was re- looked at in conjunction with the new and restarted criminal investigation. these are serious matters and we take them seriously. when it was looked at and it was deemed that these things would be of interest to the police, we immediately brought in additional counsellord macdonald, whom you mentioned earlier, mr farrellyto help advise the company on the appropriate way forward in terms of full transparency and

co-operation with police investigations. the company took those matters seriously. >> i have two questions for mr murdoch senior. i have just painted a situation where we are now here not knowing who at news international and the news of the world was complicit in keeping that file containing however many bits of paper. we are nowhere nearer knowing who knew what and when about that fileevidence that clearly not only contradicts statements given to the select committee, but evidence that it would appear led your closest and trusted aide over many years, les hinton, to give misleading

evidence. do you find that a satisfactory state of affairs? >> no, i do not. >> what do you think the company should do about it in a follow-up to this select committee inquiry? >> mr chapman, who was in charge of this, has left us. he had that report for a number of years. it wasn't until mr lewis looked at it carefully that we immediately said, "we must get legal advice, see how we go to the police with this and how we should present it," etcetera. >> my understanding was that the file was with the lawyersit was with the law firmand there would have been no reason to go and re-look at it. the opinion of it was very clear based on the review that was done. as soon as it was in a new criminal investigation, it was deemed appropriate to look at it and that was immediately

done. >> mr murdoch, you either haven't grasped the point or you are not reading your own newspapers in the form of the sunday times. my final question -- given the picture that has been painted of individuals on the news desk acting as gatekeepers for a private investigator, do you think it is possible at all that editors of your newspaper would not have known about these activities? do you think it is remotely possible? >> i can't say that, because of the police inquiries and, i presume, coming judicial proceedings. that is all i can tell you, except it was my understandingi had better not say it, but it was my understandingthat mr myler was appointed there by mr hinton to find out what the hell was going on, and that he commissioned that harbottle & lewis inquiry.

that is my understanding of it; i cannot swear to the accuracy of it. >> thank you. >> i appeal for brevity, because we have been going for two hours now. >> i will be as brief as i can. to james murdoch, it is a mystery to us how sunday newspapers are run. i am very familiar with the engineering industry. could you try to paint a picture of a week's operation at the news of the world? at what period were you closely involved in controlling the news of the world? >> my involvement in the business is overseeing the

region of europe and asia. just to be clear, in 2008, starting in the middle of december 2007, i was chief executive for europe and asia, our european television business and our asian television business as well as our uk publishing business, one title of which is the news of the world, so i cannot say that i was ever intimately involved with the workings of the news of the world. >> what results would come to you within seven days of publication? presumably, the sales and the advertising income, and you would judge the newspaper on its profitability week by week. i know that rupert murdoch is far removed from that, but when you were in close proximity >> i certainly get that from all over the world, every week. >> these are enterprises; and sales, advertising figures and personnel numbers are relevant. managers look at those things. >> we understand from questions that have been answered already that when it comes to legal issuessettlement of claimsthat

is taken outside the day-to-day management of the newspaper. that is right, isn't it? >> each group of companies or titles will have their own legal executives who deal with things such as libel, or other things. they will try to check that something does not go into the paper that is going to be wrong; sometimes that is gotten right, and sometimes it is wrong. each has its own legal resource and the managing editor's office is very involved in those things as well as the counsel's office in the newspapers. >> to give you an example of my son's typical week, it could well have been a day in munich, or a day in sky italia where he had a particularly difficult situation with a particularly tricky competitor, if i may say so. he had a lot on his plate. >> i will leave some of the more mundane issues.

it became clear from the first couple of questions to you, rupert murdoch, that you have been kept in the dark quite a bit on some of these real serious issues. is there no >> nobody has kept me in the dark. i may have been lax in not asking more, but it was such a tiny part of our business. >> i understand that, but obviously you have come to this pointyou would not be here if it was not extremely serious. >> it has become extremely serious. >> are there no written rules that certain things have to be reported straight to the very top. it sounds as if there are no such rules; it is left to the trust >> anything that is seen as a crisis comes to me. >> mr keen, may i? it is important to know that there is a difference between

being kept in the dark, and a company that is a large company, the management of which is delegated to managers of different companies within the group, and so on and so forth. to suggest that my father or myself were kept in the dark is a different thing from saying that the management and the running of these businesses is often delegated either to the chief executive of a different company, an editor, a managing editor or an editorial floor, and decision making has to be there. there are thresholds of materiality, if you will, whereby things have to move upstream, so something has to be brought to the attention. from a financial threshold point of view, we addressed that earlier with respect to the out-of-court settlement with mr taylor. but from the standpoint of things like alleged criminality, violations of our own code of conduct and things like that, those are things that the company's internal audit functionthe audit committee, as well as the senior executives

of the committeeexpect to be made aware of, as they were in the case of the criminal prosecutions in 2007. >> whatever efforts were made and whatever rules there were, news international has reached a crisis point, otherwise you would not be here today and the news of the world would not have been closed. who really is responsible? who do you hold responsible for that failure? you are saying that people should have told you. no, you are really saying to us now not that they should have told you, but that you let them get on and manage it, but they should have told you, shouldn't they? what has gone wrong? >> mr keen, that is a good question. but that is not to say that we are sayingand i am not sayingthat somebody should have told me. to my knowledge, certain things

were not known. when new information came to light with respect to my knowledge of these eventsto my understanding, when new information came to lightthe company acted on it. the company acted on it in a right and proper way, as best the company could, but it is difficult to say that the company should have been told something if it is not known that a thing was a known fact to be told. i have been asked today about what other people knew when, and i can only rest on what they have told me or what they have told you in previous hearings. i understand completely your frustration about this. you can imagine my own frustration in 2010, when the civil litigation came to a point where these things came out, to suddenly realise that

the pushback or the denial of the veracity of allegations that had been made earlier, particularly in 2009, had been too strong. that is a matter of real regret, because all the facts were not known when that was done. that is a matter of deep regret, and it is why we are here with you today, trying to be as transparent as we possibly can. >> this is, i suppose, really a rhetorical questioni am sure your answer will be what i expectbut it is admirable that you have had such long-term employees who, i am sure, have become very close friends over the years. mr rupert explained that with his determination to look after rebekah brooks, so it is admirable. there was a lot of criticism in the financial press at the timethis is not a criticism, james, of your abilitythat it was nepotism to appoint you, in retrospect. that is why i say that it is a rhetorical question and i know

what the answer will be. do you regret, mr rupert, that it has become really a family organisation for all its >> let me just go back over this. when the job became available of head of bskyb, several people applied, including my son. he passed through all sorts of not just board committees but outside experts, etc. who made the conclusion that he was the right person. the press all had a field day. when he left to go towhen i promoted him to take charge of much wider responsibilities, we had calls from all the big shareholders, or many big shareholders, saying that it was a terrible thing to take him away because he had done such a great job. >> i was not disputing james's ability. but the fact that he did not

know about so many of these criminal activities that went on, do you not think that was made more likely because of the sort of family history? i do not just mean james here. i am talking about people who were not direct members of your family but became friends. it is admirable, but you don't think that that has had an effect. >> i don't think isyou don't think that that a factor in the mismanagement, because it has been mismanaged. >> i don't think mr hinton misled me for a minute, but you must find out for yourself and make your own conclusion. other people who gave the same evidence may well have been misleading you but he certainly did not know of anything that happened. >> before i address my questions to the hearing, i just want to make a short declaration of my own, which is something that i previously declared to the committee. my wife is an employee of a company called edelman, which has been engaged by news

corporation. she has never worked on this account and has no access to information relating to it. i wanted to share that with you before asking any questions. mr rupert murdoch, you said earlier that we live in a transparent society. do you think it is right that people in public life can expect total privacy in a society like that? >> no. >> where do you think the limits of that lie? i noticed that in the watergate investigation, for example, that personal banking and phone records were used, belonging to one of the witnesses, that were relevant to that investigation. to what extent do you think the use of confidential, private information, even phone records and phone hacking, is permissible in the pursuit of a news story? >> i think phone hacking is something quite different. but i do believe that investigative journalism, particularly competitive, does lead to a more transparent and open society, inconvenient though that may be to many people.

and i think we are a better society because of it. i think we are probably a more open society than even the united states. >> where do you draw the line with that? where are the boundaries of legitimate investigation? what is that about? >> there was a greatwell if we'd done it there would have been a terrible outcry. i'm sorry to say this and i don't know your circumstances or those of anyone else around here, but when the daily telegraph bought a series of stolen documents of all the expenses of mps it caused a huge outcry, one which i feel has not been properly addressed. i think there is an answer to it and we ought to look at the most open and clear society in the world, which is singapore, where every minister gets at least $1 million a year, and the prime minister a lot more, and there is no temptation and it is the cleanest society you would find anywhere. >> good luck in selling that idea.

>> i mean that seriously. it is ridiculous that people were reduced to doing what they did. >> may i help, mr collins? it is a very good question and i think it is a really important question. i understand it is going to be one of the subjects of the judicial inquiry which the prime minister announced last week, which as a company we immediately welcomed and look forward to. this question of public interest and the question of what is acceptable and what isn't in terms of investigative techniques is an important one. but let me be very clear, the codes of conduct of news corporation globally, for our employees, journalists or otherwise, are very clear -- breaking the law is a very, very serious matter. people who are lawbreakers

should be held to account. in the matter of something like phone hacking or, topically, payments to police and things like that, we just don't think they should have any place in our business. >> so, james murdoch, you would be very clear that within your company and within your organisation, senior people should have been very aware that phone hacking was not only illegal, but totally unacceptable. >> i think, particularly in light of the successful prosecutions and convictions of the individuals involved in 2007, it could not be taken more seriously. if new evidence emerges, as it has in cases, the company acts on it very, very quickly. >> to what extent do you think that you have a cultural problem? rupert murdoch, if i may? do you think you have a cultural problem within your organisation in that people only tell you things that they think you want to hear and that even people who have been your trusted advisers and worked with you for years simply withhold information, because they want to curry favour?

>> no, not my trusted advisers certainly. you should hear the conversations in my office. they are coming in all the time and arguing. most people say i've got crazy ideas and fight against me. >> forgive me, i am asking because a lot of your trusted advisers have left your company. >> we are a very big company. i am sure there may be people who try to please me. that could be human nature, and it's up to me to see through that. >> to what extent do you think there is pressure on editors and senior managers to get scoops, to outdo each other and to win favour within the organisation that leads them to take risks and, clearly in the case of news of the world, push boundaries that broke the law? >> can you ask that again? i am sorry. >> do you think there was a pressure on editors of your newspapers that leads them to take risks and break boundaries?

in the news of the world, there was illegal action and wrongdoing, and people broke the law in order to get scoops. >> no, i think that's totally wrong. there is no excuse for breaking the law at any time. there is an excuse, if i may say so, and i think rightful, for all newspapers when they wish to, to campaign for a change in the law, but never to break it. i just want to say that i was brought up by a father who was not rich, but who was a great journalist, and he, just before he died, bought a small paper, specifically in his will saying that he was giving me the chance to do good. i remember what he did and what he was most proud of, and for which he was hated in this country by many people for many, many years, was exposing the scandal at gallipoli, which

i remain very, very proud of. >> i think that all students of history are well aware of that. >> that just addresses the question of it being a family business. i would love to see my sons and daughters follow if they are interested. >> if i may, rupert murdoch, you said earlier on that you have had frequent meetings with prime ministers during your career. >> i wish they would leave me alone. >> in the period after the arrest of clive goodmanyou said earlier that you were aware of the situation when he was sent to prison and you were aware of the case at that stagewhere there were numerous reports, investigations and hearings of this committee, about which we have heard a lot today, did any senior politicians that you were in contact with during that period of time raise this as an issue with you, raise concerns about phone hacking or >> absolutely never. the politician i met most in

those days was mr brown when he was chancellor of the exchequer. his wife and my wife struck up quite a friendship, and our children played together on many occasions. i am very sorry that i am no longeri thought he had great values, which i shared with him, and i am sorry that we have come apart. i hope one day that we'll be able to put it together again >> one final question, you said in your interview that you gave to the wall street journal that you thought that your fellow executives at news corporation had handled this crisis very well with just a few minor mistakes. do you stand by that statement or do you believe the level of mistakes was far greater than that? >> they seem very big now. what we did was terrible, but you're talking about handling the crisisi am sorry, my son

has just told me not to gesticulate. i don't believe that either he or mr hinton made any great mistakes. were mistakes made within the organisation? absolutely. were people that i trusted or that they trusted badly betrayed? yes. >> finally, to james murdoch, it was reported that when rebekah brooks spoke to staff

to announce the closure of news of the world, she said that in a year's time they might understand why the paper had to close. i won't ask you to comment on what she thought in saying that, but what is the significance of the period of time of a year? do you expect there to be significantly more revelations that, with hindsight, made the closure of news of the world inevitable? >> i can't speak to what she was specifically referring to. she made those comments herself when she was saying goodbye, sadly, to the staff. i can say that what happened at the news of the worldthe events leading up to the 2007 affairs and prosecutions and what we know about those things nowwere bad. they are things that should not have any place in our organisation, and they are things that we are unreservedly and sincerely sorry for. we have not seen the end of this in terms of the ongoing police investigations. as you know, mr collins, a

number of people have been arrested. we don't know what is going to happen in the future around those things, but given the breach of trust and given the allegations that were emerging at a rapid pace, it was clear to me, and the future will bear this outwithout any specific knowledge of the future, obviouslythat it was the right thing for the paper to cease publication. >> your father said in his wall street journal interview that you, mr james murdoch, "acted as fast as he could, the moment he could." does that suggest that you were held back at any point? have you been frustrated in this process over the past few weeks? >> as i said to the committee earlieri cannot remember to which member; my apologiesthis has been a frustrating process. my frustrationmy real angerto learn that new evidence was emerging as late as the end of 2010 was real, and is real. what i have done, and what the

company has tried to do, is take new information, adjust our course, behave with propriety, behave quickly, behave in a humble way with respect to what has happened and with respect to trying to put it right. that is what we are trying to do. it was enormously frustrating. that does not mean that i have any knowledge of anyone intentionally misleading me and the company. i don't, which makes it doubly frustrating. we are where we are. new information emerged through the legitimate due process of a civil trial. the company acted on it as fast as could possibly be expected. actually, still new information, or new allegations are emerging, and we are trying to deal with them in as right a way as we can and in the best way possible. >> the good news is that i am your last questioner. i would like to ask you a few very specific questions. starting with you, mr james murdoch, i know we have been

over at length the differences in the size of the taylor settlement and the other settlements of far less monetary value. can you tell me whether the taylor settlement included a confidentiality clause and whether the other settlement did not? >> the sitting is suspended for 10 minutes. on resuming >> john morrison, offering his

perspective on negotiations -- >> tom crane was predominantly the news of the world lawyer --

>> wednesday, david cameron address the house of commons. [no audio] >> it is extremely good that you would allow my colleagues to answer questions. >> it shows that in leadership that you would show up here today to answer these questions. i thank you for it.

if i could just take you back to before we were interrupted, could you please tell me, to your knowledge, did the confident -- was a confidentiality clause present? >> i can certainly follow up as to whether there has been any. >> i can tell you that the taylor settlement was a confidential settlement. as to other settlements post that and more recent settlements, i believe that some have been confidential and some not. i don't believe any have been

confidential settlements, but i can certainly follow up as to whether or not there have been any. it is customary in an out-of- court settlement of this nature for both parties to agree. there is nothing unusual about an out-of-court settlement being made confidential and being agreed to be confidential, but it waswith respect to the basis of the question, which i think was about the disparity in the amount of money involved, there was nothing in the taylor settlement, with respect to confidentiality, that spoke to the amount of money. the amount of money was derived, as i testified earlier, from a judgment made about what the likely damages would be and what the likely expenses and litigation costs would have been had the company taken the litigation to its end and lost. >> yes, you have been very clear about that. that is your explanation for the size of the settlement. i merely put it to you that an inference could be drawn if the larger settlements contained confidentiality clauses and the smaller settlements did not. despite what you say about it being a pragmatic decision based on the costs to the company of not settling, an inference could be drawn that silence was being bought by the presence of the confidentiality clause in the larger settlements. >> and that inference would be false. >> okay, fair enough. nub of itwill find it quite hard to believe that two executives, who nobody would regard as passive, had such

little knowledge of widespread illegality at one of your flagship papers. can i ask you very specificallymr james murdoch firstwhen did you become aware that the phones not merely of celebrities and members of the royal family but of victims of crime had been hacked? when did you become aware that the phone of the murder victim, milly dowler, had been hacked? >> the terrible instance of voicemail interception around the milly dowler case only came to my attention when it was reported in the press a few weeks ago and it was >> so only when the guardian reported it. >> i can tell you, it was a total shock. that was the first i had heard of it and became aware of it. >> is that the same for hacking of other victims of crime? in other words, have you been made aware prior to the milly made aware prior to the milly dowler story breaking that your